VAT for restaurants in Iceland
Iceland has two VAT rates. This guide shows which rate applies to what a restaurant sells, how to calculate the VAT inside a price, and what the receipt must show.
In this guide
Two rates: 11 % and 24 %
The standard rate is 24 %. The reduced rate is 11 %. Most of what a restaurant sells falls under the reduced rate.
Since 1 January 2015, food and drink sold by a restaurant have been at 11 %. This includes alcohol: beer, wine and cocktails at the bar carry 11 % VAT, the same as the food.
11 %
Reduced rate
- Food, eat in or take away
- Soft drinks, coffee and juice
- Beer, wine and other alcohol
- Cakes, bread and food products for sale
Plokkfiskur (fish stew)3.490 kr.
Of which VAT 9.9 %346 kr.
24 %
Standard rate
- Branded merchandise such as mugs, T-shirts and bags
- Goods that are not food or drink, such as candles or gifts
- Some services, such as equipment hire
The line between the two rates is not always clear. Ask your accountant about each product category you are unsure of.
Branded mug2.490 kr.
Of which VAT 19.4 %482 kr.
Menu prices always include VAT
Guests see prices with VAT included. The receipt must then show how much of the price is tax.
To find the VAT inside a price that includes VAT, multiply the price by the rate and divide by 100 plus the rate. At 11 %, that is price × 11 ÷ 111.
VAT = price × rate ÷ (100 + rate)
Worked example: a receipt with two VAT rates
Table 7 orders two plokkfiskur, one kjötsúpa (lamb soup), two beers and a coffee. On the way out, the guest buys a branded mug. The food and drink are at 11 %. The mug is at 24 %.
- 1
Add up the price of every line at each rate.
11 % 6.980 + 2.990 + 3.380 + 590 = 13.940
24 % 2.490
- 2
Calculate the VAT inside each sum with the formula above.
11 % 13.940 × 11 ÷ 111 = 1.381
24 % 2.490 × 24 ÷ 124 = 482
- 3
Subtract the VAT to get the net amount, the price excluding VAT.
11 % 13.940 − 1.381 = 12.559
24 % 2.490 − 482 = 2.008
Result
| Rate | Incl. VAT | VAT | Excl. VAT |
|---|---|---|---|
| 11 % | 13.940 | 1.381 | 12.559 |
| 24 % | 2.490 | 482 | 2.008 |
| Total | 16.430 | 1.863 | 14.567 |
- 2 × Plokkfiskur 6.980 2 × 3.490
- Kjötsúpa 2.990
- 2 × Draft beer 3.380 2 × 1.690
- Coffee 590
- Branded mug 2.490
| VAT | Net | VAT | Gross |
|---|---|---|---|
| 11 % | 12.559 | 1.381 | 13.940 |
| 24 % | 2.008 | 482 | 2.490 |
What the receipt and the Z-report must show
A receipt from a restaurant must give details of the seller, the sale and the tax. The POS should print this on every receipt automatically.
- 01
Seller name, kennitala and VAT number
At the top of the receipt, with the address.
- 02
Date and sequential number
Each receipt gets its own number in an unbroken sequence.
- 03
What was sold and at what price
One line per item, with quantity and price.
- 04
VAT by rate
Net amount, tax and total for 11 % and 24 % separately.
- 05
Total and payment method
What the guest paid and how.
The exact receipt requirements are in the rules from Skatturinn (the Icelandic tax authority). Confirm with your accountant that your POS meets them.
At the end of the day, the Z-report must show sales and VAT by rate. Your bookkeeper uses those figures in the VAT return.
End of day
Thursday 01.10.2026
Sales by hour
Payments
- Card
- 842.100 kr.94,7 %
- Cash
- 46.800 kr.5,3 %
VAT
| Rate | Net | VAT |
|---|---|---|
| 11 % | 789.640 | 86.860 |
| 24 % | 10.000 | 2.400 |
Sources
This guide is a general overview written by the Resto team. Rules change and every business is different. Always confirm with your accountant and read the rules on skatturinn.is.